Sanofi SA has reached a $40 million settlement of a U.S. lawsuit accusing the French drugmaker of misleading investors about the safety of a weight loss pill that a U.S. regulatory panel linked to suicidal thoughts.
The all-cash settlement was disclosed in a court filing on Thursday, and requires approval by U.S. District Judge George Daniels in Manhattan.
It resolves claims that arose after a U.S. Food and Drug Administration advisory committee on June 13, 2007 urged that the agency reject Sanofi's drug rimonabant, known by the trade names Acomplia and Zimulti, on concern that using it could increase suicidal thinking and depression.
Sanofi is the world's fourth-largest pharmaceutical company as measured by prescription drug sales. European regulators had approved use of rimonabant prior to the FDA panel action, but sales were later suspended.
Plaintiffs led by the Hawaii Annuity Trust for Operating Engineers accused Sanofi of touting the drug as a possible "blockbuster" to treat obesity, with only mild side effects.
But they said Sanofi concealed clinical tests that showed a statistically significant increase in "suicidality" among people taking the drug.
The release of the advisory committee recommendation caused Sanofi's shares in Europe and American depository receipts in the United States to fall in price.
Thursday's settlement covers investors in Sanofi ADRs between February 24, 2006 and June 13, 2007, and equates to about 37 cents for each of Sanofi's roughly 108 million ADRs at the time.
It also resolves claims against Gerard Le Fur, the former chief executive, and Hanspeter Spek, an executive vice president of pharmaceutical operations, court papers show.
"The settlement, in light of all the risks, was exceedingly fair, and represented a high percentage of the total damages suffered by the class," said Tor Gronborg, a partner at Robbins Geller Rudman & Dowd who represents the plaintiffs, in an interview.
Sanofi did not immediately respond to requests for comment.
The plaintiffs' law firm plans to seek a fee of $11 million, or 27.5 percent of the settlement amount, court papers show.
The case is In re: Sanofi-Aventis Securities Litigation, U.S. District Court, Southern District of New York, No. 07-10279.